I don't trade in options.
Who stopped you from getting started. Start now, start understanding.
What I understand about options is as following:
Options are contracts.. which are bets you put against a commodity movement. In our case stocks/NIFTY. These entities are called underlying entities for the specific contract/agreement.
These bets wont be as costly as the entity itself.
There are Option Buyers & Option Writers.
Option Writers will add to "Open Interest" by writing new options.
Option Writes will reduce "Open Interest" by covering already written options.
There are two types of options. PUTs & CALLs.
CALLs are written by Option Writers when they think a stock will not go up. PUTs are written when the stock price is not expected to go down.
The option buyers will buy these options because they think otherwise.
Lets say you want to trade in NIFTY options. You can be option writer/ option buyer.
There will requirements from your broker about how much money you should have in your account, if you want to write options. Seniors can advice on this, or you find the details in some old threads here at TJ.
Every month these options expire on last week Thursday with in the month.
Options example:
At present Nifty is at 5320.
Lets say you think markets will fall tomorrow below 5300. You can choose to write CALL option or buy a PUT option.
I dont know much about writing options. So, I will go with buying PUT option.
See the NIFTY link below:
http://nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp?segmentLink=17&instrument=OPTIDX&symbol=NIFTY&date=27SEP2012
5300 PUT is trading at 73 rupees. If nifty goes to 5200.. this PUT will be worth approximately 128 rupees(Currently 5400 PUT is trading at that price).
There is something called as "Time Decay". You should also know about that. Also two more terms: "In Money", "Out of Money".
I know only this much about options. You can look at other threads or the internet to learn more about them.
Regarding the whales & medium sized fishes.. I don't need to explain. You will know what I mean sooner or later.
All the best.